×

Rising From the Ashes: Universal's Back Lot

Nearly two years ago Universal Studios' back lot was ravaged by a massive fire; Thursday it re-openedwith a range of new backdrops designed to keep productions local.

California Governor Arnold Schwarzenegger speaks at a dedication ceremony for the Universal Studios newly rebuilt New York Street backlot locations.
Mark Ralston | AFP | Getty Images
California Governor Arnold Schwarzenegger speaks at a dedication ceremony for the Universal Studios newly rebuilt New York Street backlot locations.

The studio —and special guest Governor Arnold Schwarzenegger — unveiled four acres of rebuilt New York street locations. (Universal, like CNBC is owned by NBC Universal and our parent company is General Electric . And full disclosure: The back lot is immediately adjacent to CNBC's Los Angeles bureau.)

The back lot is a favorite of tourists taking the Universal Studios tour — a tour that suffered a loss when the famous "Back to the Future" Clock tower set was damaged by flames. But the new back lot has a lot more to do with building a new destination for TV and movie productions than keeping tourists happy.

Universal is hoping its new acres of New York locations will be an incentive for TV shows and movie shoots to stay close to home and pass up tax breaks in New York and elsewhere. L.A. Mayor Antonio Villaraigosa attended the opening of the lot, proclaiming "it a great day for the city." Villaraigosa pointed out that the movie industry employs an estimated quarter million people in Los Angeles county and is a key "economic anchor."

"Runaway production," as it's called, has been a major challenge for Los Angeles film coffers. The state hasn't been able to afford the rich tax credits given by the likes of Louisiana, New York, and New Mexico, and the number of production days on Los Angeles streets have dropped by double digits in recent quarters.

But a study released earlier this year "Movie Production Incentives: Blockbuster Support for Lackluster Policy" found that production incentives like tax credits, cash rebates, grants and tax exemptions- fail to spur economic growth or raise tax revenue. Perhaps what Hollywood needed was pure convenience. New York is pretty convenient as locations go — there are plenty of good crews and the city makes on-site shooting manageable.

But the option of shooting scenes that actually look like they're on New York city streets in beautiful Southern California — that could be a win-win-win. Studios get a lower-cost option for New York shooting. Universal gets to generate revenue from its shiny new sets. And Villaraigosa gets more tax revenue, which the city sorely needs.

Questions? Comments? MediaMoney@cnbc.com